Project Proposal For Bakery Plant Factory PROJECT PROPOSALFOR BAKERY PLANT PROJECT TO

BE IMPLEMENTED IN ADDIS ABABA CIYT PROMOTER: GETACHEW LEGESSE SEGNIJuly

2022Addis Ababa, EthiopiaPromoter: - getachew Legesee Segni

Page1

Close

Project Proposal For Baker Plant

Table of contents

I. Executive Summary1.Introduction

1.1Background………………………….……….5

1.2Brief History of thee Promoters……...…..6

2.General Market Study and Plant Capacity

2.1Past Supply and Present Demand…………………………….………..6

2.1.1Object of the project …………………………………………………....7

2.1.2The Economic Significance of the project……………………………...….7

2.1.3Source of Revenue…………………………………………….7

2.1.4Employment Opportunity………………………………………….8

1
2.1.5Save the country foreign Exchange………………………………………..8

2.1.6Benefit for the local Community ………………………..……...8

2.2Technology and Engineering ………...………………………..………..……..9

2.2.1Project Location ,Infrastructure and Economic Activities……….…….…10

2.2.2Economic Activities …………………………………………….………..…..112.2.3Land requirement and

land use plan……………………………….....…11

2.2.4Price and Distribution………………………………………122.3Plant Capacity and Production

Programmer…………..………….…….....….122.3.1Plant
Capacity…………………………………………….122.3.2Production Programmed……………………………...
…….132.3.3Materials and Inputs…………………………….……...…………133.Organization Structure,
Management and Manpower

3.1Organizational Management duties and Responsibilities………………...………14

3.2Man power Requirement ………………………………………………….....…..153.3Organizational

Structure……………………………………….….153.4Man power salary
Expense……………………………………….......174. Financial Requirement and Analysis

4.1.Total Initial Investment Cost………………………………….……………...184.1.1.Fixed Investment

…………………………………………...……….……194.1.2.Initial Working
Capital………………………………………………20Promoter: Getachew Legesse Segni

Page2

Project Proposal For Baker Plant 4.2.Financial Analysis and Statements………...21

4.2.1.UnderlyingAssumption………………………....................................................224.2.2.Source of
Fund ……………………………………………………….....234.2.3.Loan Repayment

2
Schedule…………………………………….......244.2.4.Annual depreciation schedule of the fixed asset
( birr)...25

4.2.5.Balance Sheet (Beginning)……………………………….……..254.2.6.Income/Loss..............25

4.2.7.Pay-BackPeriod………………………….…………...255.1 Financial Evaluation

…………………………………….…...……………..26Promoter: Getachew Legesse Segni

Page3

Project Proposal For Baker Plant I.EXECUTIVE SUMMARY

1Project NameBakery plant Factory

2Project Owner Getachew Legesse Segni

3Project status New

4NationalityEthiopian

5 ProjectCompositionBakery, keki and Others related products

6Premises rentedland New Expansion 5000 M2

3
7Total InitialInvestment CostBr.100,000,000from this amount 30% (30,000,000) is fromthe

owner’s equity and 70 % (70,000,000) from bank loan.

8EmploymentOpportunity50 employeesOn Permanent Basic :-20employmentOn Temporary

Basic :-30employment

9Source of fund of

 promoters Owner Equity:- 30%

Expected Bank Loan :- 70 %Promoter: Getachew Legesse Segni

Page4

Project Proposal For Baker Plant the project

Loan Repayment Period :- 5 Year Interest Rate :- 12 %10Total Capital

1.1 Fixed Capital =5,805,200 birr

1.2Working Capital =4,194,800 birr11Benefits of the project for theregion/ countryValue add,

supply of quality product, employmentopportunity, income generation, source of revenue to

thegovernment, save the foreign exchange, technology transfer and environmental protection

through recycling.

1.INTRODUCTION

4
Bakery products, due to high nutrient value and affordability, are an item of huge

consumption.Due to the rapid population rise, the rising foreign influence, the emergence of a

female working population and the fluctuating eating habits of people, they have gained

popularity among people, contributing significantly to the growth trajectory of the bakery

industry. A number of healthy products have been launched in the bakery segment and are

gaining popularity at a highrate.Awareness of high quality baked goods is on the rise. Good

bread is a rare combination of nutrition, convenience, and luxury. Today's consumer has less

time to create wholesome,handmade bread, but increasingly appreciates the nutritional and

sensory benefits it provides.Good bread provides fiber andcarbohydratesin a convenient, low

fat form that is portable anddelicious. Good bread never goes out of styleIn this regard, the

envisaged project is a newly established Ethiopian owned business founded byMr. Getachew

Legesse Segni , who has been engaged in hotel services business for more than adecade. The

new bakery project has intended to produce and sale bread and pastry products of high quality

ingredients using modern production techniques. In addition the company’sPromoter:

Getachew Legesse Segni

Page5

Project Proposal For Baker Plant objective is to generate income for the company by

participating actively in the businessenvironment with creating employment opportunities for

surrounding community.Currently, the project promoter has finalized researching the market

and has concluded that theintended business is an attractive investment. The planned

5
production capacity of the project isassumed initially based on two shifts with capacity

utilization rate at 70%, 80%, 90%, and 100%during 1st , 2nd , 3rd , and 4th-10th years

respectively. Accordingly, it will have a total production capacity for each item per annum as

followAlthough there are many established competitors with in the vicinity where the

underlying project has planned to be located; it will possess an advantage that lies with the high

quality of its products due to specialization and artisan manufacturing. The main marketing

focus will be of allcommunity inclusive and having an eye catching sign, the scent of fresh bread

wafting out of thestorefront, and periodic printed advertisementsAfter establishing the

operation, the company will explore the possibility of making takeout anddelivering wholesale

bread and baked goods to area restaurants and specialty retailers will also be considered.

Hence, the market for the products under consideration is projected to growrapidly in the

coming years. The products will be supplied to high demanding domestic marketand also will

improve the supply of breads to and improve the lives of local community throughemployment

creation.The Shawa bakery and Sheger bakery industry is one of the biggest sections in the

country’s processed bakery. Bakery products, which include bread and biscuits, form the major

bakedfoods accounting for over 82 per cent of the total bakery products produced in the

country. Itenjoys a comparative advantage in manufacturing, with an abundant supply of

primaryingredients required by the industry, and is the third-largest biscuit manufacturing

country (after the United States and China). The bakery segment in India can be classified into

the three broadsegments of bread, biscuits and cakes. India’s organized bakery sector produces

about 1.3million tonne of bakery products out of 3 million tonnes while the balance is produced

byunorganized, small-scale local manufacturers.Promoter: Getachew Legesse Segn

6
iPage6

Project Proposal For Baker Plant Despite the fact that there are many automatic and semi-

automatic bread and biscuitmanufacturing units in India, many people still prefer fresh bread

and other products from thelocal bakery. The popular biscuit variants in India are glucose

biscuits, Marie, cream biscuits,crackers, digestive biscuits, cookies and milk biscuits.As far as the

Shawa bakery and Sheger bakery market is concerned, the shares of the brandedand organized

sector and the unbranded and unorganized sectors are 60 per cent and 40 per centrespectively.

Shawa bakery and Sheger bakery products, especially biscuits, are in great demandin

developing countries.Baked goods are expected to grow by constant value at a compound

annual growth rate (CAGR)of two per cent over the forecast period. The bakery industry in India

has witnessed an annualgrowth rate of more than 15 per cent during the past years. As the

business and the industrythrives, the challenges accruing out of it are also growing expediently.

Like many industries,retail bakeries see rising costs in fuel, healthcare and other expenditures

cut into their bottomlines and increase the costs of doing business. Driven by the evolving

perception of bakery products in India and the changing consumer preferences, the Shawa

bakery and Sheger bakeryindustry would touch levels of Rs. 500 billion in the next five years.1.1

BackgroundThe bakery industry plays an important role in industrial activities of food

processing industry inthe country. In the modern times, it provides nutritious food to go large

number of households incities. The Shawa bakery and Sheger Bakery sector consists of some of

the foods like cakes, breads, biscuits and chips etc. Since the development of new food

7
technology, a variety of products are prepared in the Bakery.. Based on its baking quality and

other quality indices suchas gluten quality and content, color, moisture content, granular size of

particles and others, flour is divided into different grades. The basic application of flour is for

bread making, cakes and biscuits, and porridge at household level. Semolina, a product

obtained by milling extra hard(durum) wheat, is also used in pasta and macaroni making. The

byproduct bran is used as animalfeed preparation. Biscuits are oven – baked food items with

greater nutritive value than plain bread of equal weight. They are classified as hard, soft and

“batter” biscuits. They can be savory,sweet, plain – baked, filled or coated (or a mixture of

several of these options).Biscuits satisfy special dietary needs, such as those for high fiber,

protein or extra vitamins (as ininfant rusks). Biscuits also contain fat and often sugar, and are

cut or molded into thin layers andPromoter: Getachew Legesse Segni

Page7

Project Proposal For Baker Plant ked rapidly and thoroughly. If packed in a moisture proof

material, biscuits can have a long shelf life. Biscuit are largely consumed by children and

teenagers.

1.2Brief History of the Promoter

The Promoter Getachew Legessee planned proposed Land plan5000 M2own possession.

ThePromoter new of buildings, installed machineries, other requirements and the project

isoperational, of bakery, keki and Others related Factory and supplying to the local market

8
andcreated job opportunity for the local peoples. The financial performance of the factory

wasviable.

2. MARKET STUDY AND PLANT CAPACITYA. MARKET STUDY

2. 1. Past Supply and Present Demand

Now a days, Bakery products are an item of mass consumption. In view of its low price and

withrapid growth and changing eating habits of people, bakery products have gained

popularityamong masses of the sector overall. The growth rate of bakery products has been

tremendous in both urban and rural areas. Increased number of working women, Change in

Shawa bakery andSheger bakery meal pattern, increased income, urbanization etc., has

increased the demand for bakery products In Ethiopia, the rural population used to consume

flour made from cereals bytraditional means at home. Grain mills, however, are expanding

deep into rural areas reducinglabour and time for women, replacing home-made flour

consumption of industrially processedflour, however, is still insignificant in rural Ethiopia.Urban

dwellers, on the other hand, consume more and more flour produced by flour mills thusshifting

to manufactured flour. Urban house-holds also consume food items like bread, biscuitsand

cakes prepared at home or in bakeries and pastries from industrially processed flour.The

demand for wheat flour is met through both local production and imports. The

apparentconsumption of flour, comprising both domestic production and Biscuits are very

popular fooditems. They are pleasant in taste and do not require cocking and hence ready to be

served.The local demand for biscuits is met both by domestic production and

imports.Promoter: Getachew Legesse Segni

9
Page8

Project Proposal For Baker Plant .

2.1.1.Objective of the Project

The main objective of this factory is to manufacture, cost effective, market oriented, client

basedand quality baker and Others related for local market.Promoter: Getachew Legesse Segni

Page9

Project Proposal For Baker Plant To generate employment in PACS by production

activityProvide financial benefits to member farmers of the PACSDevelop an attitude of

business in PACS.Women empowerment by generating employment for womenTo utilize idle

land resources of the PACS and make them business generationentity.

2.1.2.The Economic Significance of the Project

The envisaged project deemed to contribute to the economic development of the nation

ingeneral and the region in specific with following ways:

2.1.3.Source of Revenue

10
As public policy of any nation, the government collects different forms of taxes from different

business organizations and individuals. Among the different forms of taxes, business

incometaxes, payroll tax and VAT are collected from undertaking business activities. Therefore,

the project will serve as sources of revenue for both the region and nation as a whole.

2.1.4.Employment opportunity

One of the problems that our country faced is unemployment. Therefore, the current objective

of the government is working on tackling the problem of unemployment and fostering

thedevelopment process either through creating self employment or employment in other

organization. Hence, this project will hire50(20 permanent and 30 on temporarily basis)citizens.

2.1.5.Save/Generate the Country Foreign ExchangePromoter: Getachew Legesse Segni

Page10

Project Proposal For Baker Plant All types of the envisioned products (Produced by the project)

are mostly imported from abroad.By producing in Ethiopia, the factory will save the foreign

currency of the nation.By minimizing the market demand and supply gab for these products,

the factory will help toreduce the nation’s foreign exchange cost to import these products. This

will save the foreignexchange resource of the nation.

2.1.6.Benefit for The Local Community

11
As a corporate responsibility the promoter will engage in different development activities on

thesurrounding areas. This will better worse the community and contribute for the

development of the nation.

2.1.7. Stimulate the Local Economy

This factory has positive externality in the country that will encourage the economic

movementof local economy. There will be economic relationship and transactions among

different factors.

2.2 TECHNOLOGY AND ENGINEERINGA. TECHNOLOGY

1. Production Process

The production process of baker plan consists of four major operations:-• Wheat Intake and

Pre-Cleaning,• Wheat Cleaning and preparation,• Milling, and• Packing and

Dispatching.Promoter: Getachew Legesse Segni

Page11

Cancel Anytime.

Project Proposal For Baker Plant Wheat Intake and Pre-cleaning:- The major unit operations are

dumping, conveying, weighing, pre-cleaning and conveying to storage silos or transferring to

the working bins of the cleaningroom.Wheat Cleaning and Preparation: - The main unit

12
operations involved are weighing,screening, destining, impurity separation, ferromagnetic

separation, scouring, aspiration,dampening, tempering and ventilating. Milling: - Major

operations involved are weighing, breaking open, scalping, scratching,detaching, sifting,

purifying, milling (grounding), resifting and entoleting.Packing and Dispatching: - The major

operations involved are collection of flour streams and bran, mixing and aerating, resifting,

entoleting, packing, sewing, loading and dispatching. The process does not release any

pollutant to the environment.

1.1.Location and Premises required

A.Location

The envisioned project is planned to be located in Addis Ababa City. Generally, the rental value

period of rural land are determined and fixed by land use regulations of the

regionalgovernmental of Addis Ababa City. The area of land needed for development activities

are basedon the types of projects. The maximum period of land allotted for investment

purposed is notgreater than forty five (45) years. Rental prices in rural are determined on the

types, magnitudeand location of the project areas.An Investor has the right to hold land either

on lease or rental basis in Addis Ababa. Theinvestment Board of the region with priority given

to approve investments delivers land to aninvestor within a short period of time through its

channels. Urban land in these cities and townscan also be given with the maximum price within

a short period based on the interest andcapacity of the investor. The maximum and minimum

annual lease charge ranges will largelydepends on the type of project location of the land and

the size of land requested.Promoter: Getachew Legesse Segni

13
Page12

Project Proposal For Baker Plant

2.2.2.Economic activity of Area

Most of the residents of the Country earn its living means from business activity, even

thoughthe number of civil servants can’t be under mined. The location of the town on a get way

tomany zonal towns facilitated by types, quantity of transactions being under taken, &

differenttypes of private industries are allocated in the town. Bars, restaurants, hotels, pastry,

recreationcenters and Industrialization area are flourishing as well as response to demand from

the businesscommunity. This is further facilitated by the number of daily arrivals from different

enroot toAddis Ababa.

2.2.3.Land Use Plan

The Promoter acquired a total of5000 M2 areas of land the promoter had been using the land

and planned to use it as indicated in table below.Table: Land Use Plan for bakery and related

product Factory

SNDescriptionLand Requirement (M2)1Baking Ovens10002Dough Mixers10003Cutter, Divider,

Sheeter 10004Rusk Making Machine5005Flour Sifter, Sugar Pulverize, Biscuit Grinder

5006Trays, Scoops, SS Bins, Pellets,1507Miscellaneous Equips: Small RO Plant, smallflour

mill1508Shopping area200Promoter: Getachew Legesse Segni

14
Page13

Project Proposal For Baker Plant Total5000Promoter: Getachew Legesse Segni

Page14

Project Proposal For Baker Plant

2.2.4.Pricing and Distribution

The current price of flour at Addis Ababa, adama, bale and arsi is Birr 1,600 per quintal. For this

project, an ex-Factory price of Birr 1,600 per quintal is proposed. bakers is an industrial as

wellas a consumer product. Bakeries and pastries could be supplied directly at factory gate or

throughintermediaries. Households could be supplied through retailers as well as with

distributioncenters to be established by the new project itself. The prices of most biscuit brands

are withinreach of ordinary people’s budget. Biscuits are, therefore, in demand in both urban

and ruralareas of the country. There are also many convenient outlets for biscuits including

neighborhoodand village shops. The general situation in the market for biscuits is going towards

full-fledgedcompetition through brand development, range of products offered, delivery,

advertisements and packaging. The price of biscuits varies with the brands and their contents

and packaging are alsodifferent. The average price some of the most popular brands is Birr

15
4/100 gm. On the basis of this price level and taking in to account a margin of 25% for

wholesalers and distributors, therecommended ex-factory price for the new project is Birr

3.20/100gm.

2.3. PLANT CAPACITY AND PRODUCTION PROGRAMME

2.3.1 Plant Capacity

According to the market study, the unsatisfied demand of wheat flour in the year 2008 will

be65,445 tones, whereas this demand will grow to 384,611 tons by the year 2020. Taking

onlyabout 50% of the demand of the year 2008, the envisaged plant will have an annual

capacity of processing 41,000 tones pure wheat and produce 31,160 tons of wheat flour and

9,840 tones of bran. The plant will operate 3 shifts of 24 hours a day, and for 300 days a

year.Based on the outcome of market study and considering the minimum economic scale of

production, the envisaged plant will have production capacity of 1,500 tons of hard biscuits per

Promoter: Getachew Legesse Segni

Page15

Project Proposal For Baker Plant annum. This capacity is proposed on the basis of a single shift

of 8 hours per day and 320working days per annum

2.3.2.Production Programmed

16
The plant will start operation at 75% of its installed capacity during the first year, and

willincrease production to 85% in the second year, and then to 100% in the third year and then

after.1kg of flour corresponds to 1.33kg of baked bread (depend on daily consumption of flour

and equipment capacity)Year 12 3-10Capacity utilization (%) 7585 100(kg)Bakery100,000

5,000,000 1,080,000

Production capacityThe project starts supply the product after the establishment of the

factory.After the factory construction is completed the company will produce standard

bakery,chocolate, candy and chewing gum products. with regard to market potential, there is a

widedomestic and international market.Sales PlanThe Revenue of the Project is assumed to be

generated from the sales of the company’s productsas follows:

NoDescriptionUnitYearlyUnitprice/piecesTotal Priceproduction1BakeryPieces 1,080,0002.50

birr2,7,000,0002Chewing gum ,Chocolate andothers“3,600,0002.00 birr 7,200,000Promoter:

Getachew Legesse Segni

Page16

Project Proposal For Baker Plant Land requirement and land use planThe area of land required

for the proposed project is estimated to be 5,000 m2. The landrequirement of the project has

been decided by taking the dimension of building and for other facilities.

2.3.3 MATERIALS AND INPUTSA. RAW MATERIALS

17
Various types of baker do exist depending on the ingredients used and manufacturing

processemployed. The envisaged plant will produce hard biscuit. The raw materials required for

production of hard biscuit comprise wheat flour, sugar, shortenings, salt, Sal volatile, sweet

jelly,glucose, and starch. The major raw materials like wheat flour and sugar can be obtained

locallyfrom flour mills and sugar factories while the remaining 8 raw materials will be

imported.Annual requirement for raw materials at full production capacity of the envisaged

plant and theestimated costs are givenThe principal raw material for flour production is wheat

grain. Flour for baking bread is produced from hard wheat or a blend of hard and soft wheat,

while flour for cakes and biscuits ismilled from soft wheat. Wheat can be available in different

part of the region. The impurity ratefor local wheat should not exceed 8%.Promoter: Getachew

Legesse Segni

Page17

Project Proposal For Baker Plant B.UtilitiesA number of utilities would be put in place in order

to ensure smooth functioning of the factory.These utilities include: Water Supply,

Supplementary Electricity supply, Paved RoadTransportation, Drainage Facility.

3.OGANIZATION, MANAGEMENT AND MANPOWER

3.1.Organization and Management

1.General ManagerDuties and responsibilitiesShe/he will plan, organize, direct and control the

overall activities of the factoryShe/he will devise policies and strategies that will enable the

18
factory to be profitable.She/he will incorporate modern technological innovation that will

facilitate the servicedelivery of the project center and increase customer’s satisfaction.He/he

will plan, organize, direct and control the human and non-human resources of the plant so as to

achieve the short and long run objectives of the organization.

2.The Manufacturing Department

Duties and responsibilities: -It is the core department of the project center and has the

following responsibilities.Promoter: Getachew Legesse SegniPage18

Project Proposal For Baker Plant Use modern manufacture, processing and technologies that

will enhance the qualityof those products.Produce quality product that will enable the center

competent both in the domesticand international market.Use appropriate technology to

manage its products.Control on the quality of raw materials, inputs, quality of the product and

also theoverall production process.Produce products in least cost so that the profitability of

the center is guaranteed.Moreover, control over the quality of the final products

3.Administration and Finance Department

Duties and responsibilities: -Will plan, organize direct and control the financial transaction of

the plant by using theentire necessary document.Will develop sound financial control system

by developing modern financial controlsystems.Will prepare the annual financial statements

and prepare condensed reports for thegeneral manager, owner and other concerned

government body.Will control the human and non human resources of the plant, which

19
include: effectivehandling of the different inventories of the machineries, equipments, raw

materials,finished products, and devise strategies of controlling against fraud and

damage.Manage and execute The promoter national and international procurement

procedureAdminister and control The promoter logistic resourceEffectively administer the

promoter Procurement process domestically as well asinternationally.Manage the public

relation of The promoter/factory with external parties/stakeholdersProvide and manage

general supportive service to the plant.

4.Commercial DepartmentPromoter: Getachew Legesse Segni

Page19

Project Proposal For Baker Plant Duties and responsibilities:- Will handle the overall

marketing activities of the organization which include planning,organizing, directing, and

controlling.Provide cost estimates in preparation for securing ...Gather information on new

product design, profileApproval of new products profile & brand plan analyzes market

research.Plan and execute sales.Will develop effective customer handling strategiesWill

design and implement effective advertisement and promotion schemesWill develop the

marketing strategies for future project center’s development.Conduct both foreign and

domestic market research for expanding the sales of The promoter All workers have

responsibilities on each activity they assigned for.

B. TRAINING REQUIREMENT

20
The production supervisor and skilled workers require few weeks training on machine

operationand production technology. Training is assumed to be entertained during the erection

andcommissioning period and the cost is in built there and hence about Birr 25,000 is sufficient

tocover expenses associated with the training programmed.

3.2 Man Power

The total manpower required for the factory will be50(20 temporary and 30 permanent)

persons. The manpower list and the Corresponding labor cost are shown in part 5 on the

financial part.

3.3 Organizational Structure

The organizational structure of the project is designed by including all the necessary

personnelunder the right division. At the top of the organizational structure, there will be

manager with theresponsibility of supervising the overall activity of the plant. Depending up on

the nature of thecenter and the amount of work to be performs; there exist auxiliary units

under the generalmanager.Promoter: Getachew Legesse Segn

iPage20

Project Proposal For Baker Plant Employees under each unit will be supervised by the

department head that is accountable for thegeneral manager. General Manager is appointed by

the owners.3.4.Salary ExpenseThe total number of manpower, manpower list, qualification, and

salary and sex composition arelisted in the table below.Description of manpowerRequired

21
qualificationUnitRequiredNumberMonthlysalary (Br.)Annualsalary (Br.) Project

ManagerManagement

No13,00036,000CashierDip. Accounting“2150036,000AdministrationBA.in

mgt“22,50060,000Store

keeperAccounting“1150018,000MechanicsTechnique“2200048,000Production ControlFood and

Niuterion“2250060,000Driver3rdlevel license “2120028,800Promoter: Getachew Legesse Segni

Page21

Owner General ManagerManufacturingDepartmentAdmin &

FinanceDepartmentCommercialDepartmentExecutiveSecretary

Scribd

Trusted by over 1 million members

Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions!

Start Free Trial

Cancel Anytime.

22
 Project Proposal For Baker Plant Tire and fuel manGrade 10“280019,200GuardsGrade

8“580048,000SupervisorBA in economics“4180086,400AccountantBA

Accounting“31,50054,000Sales manBA in Marketing“51,65099,000PurchaserBA in Purchasing

mgt.“51,65099,000Sanitary dip. Sanitary“2150036,000Daily laborers 40 birr/day

(40*12*320)-“12-153,600Total 50 88,200,000

4.FINANCIAL REQUIREMENT AND ANALYSIS

4.1. Total Initial Investment Cost

The total cost of money that is required to estimated the envisaged Bakery Plant Factory is to

be birr100,000,000.Table Total Initial Investment Capital

NoDescriptionCost1Fixed Investment

1.1Land, Building and Construction 18,052,0000.00

1.2Machines and Equipment’s22,000,0000.00

1.3Vehicles and Motors130,000,0000.00

1.4Office Furniture and Equipment5,000,0000.00

Total Fixed Investment Cost 58,052,0000.00

2Operating Expense

2.1Raw Materials Purchase and Products23,128,0000.00

2.2Salary Expense88,200,0000.00

23
Promoter: Getachew Legesse Segni

Page22

Project Proposal For Baker Plant

2.3Other Operating Expense

5,000,0000.002.4Pre-operating Expense5,000,0000.00Total Operating

Expense41,948,0000.00Total Investment Cost100,000,0000.00

4.1.1. Fixed InvestmentBuilding and Construction

NoParticularsUnitUnit cost(Br.)Estimated totalcost (Br.)1Main Production Building for

rentsM21,460 5,000,0002Production HallM21100 200,0003Quality control and standardization

areaM2500 200,0004Storage for Raw materials different Bakery plant ComplexM2500

200,0005Product StoreM2300 105,2006Offices BuildingM2130 100,0007Toilet and shower

roomM2120 100,0008WarehouseM2150 100,0009Show room M2120 100,00010Cafeteria

ServiceM2120 100,00011Waste disposal accumulation centerM2150

100,000Total5,00018,052,000

4.1.2. Required Machinery

A. Total Cost Machinery and Equipment for Wheat flour and macaroni and Pasta

NoDescriptionQtyUnit PriceTotal Cost(Birr)TotalPromoter: Getachew Legesse Segni

24
Page23

Project Proposal For Baker Plant

1Weighing balance No2 4,000 8,000

2Planetary Mixer“3 80,000 240,000

3Double deck oven3 200,000 600,000

4Slicer3 200,000 600,000

5Dough sheeter2 100,000 200,0006Packaging machine (sealing machine2 200,000 400,000

7Miscellaneous equipment includes different types oftray, mold, nozzles and cutter, spatula,

shifter,grinder, working table etc2 100,000 200,000Total22,000,0004.1.3.

VehiclesSNDescriptionQtyUnit PriceTotal Price(Birr)1Pick Up12,750,0002,750,0003Mini Bus

Service11,550,0001,550,000Total4,300,0004,300,000

4.1.4. Office Furniture and Equipment

SNDescriptionQtyUnit cost(Br).Total cost (Br).1Managerial chair with tables

15,0005,0002Secretarial chairs with table 13,0003,0003Office Chairs with

tables51,3506,7504Computer with printer510,00050,0005Shelf23,5007,0007Telephone

machine set21,5003,000Promoter: Getachew Legesse Segni

25
Page24

Project Proposal For Baker Plant 8Filing Cabinets

22,0004,000

9Assembly chair and table 19,250

10Decoration(Carpet & Curtain) 12,000

11Reserve different Equipments 390,000 Total 5,000,000

4.1.4. Office Equipments

4.2.INITIAL WORKING CAPITAL

The initial working capital is established to be 5,194,800.00 birr

4.2.1.Pre -Service Expense

SNDescriptionCost in br.

1Project proposal 10,000

2Licensing fee and others 2,000

3Promotion and adverting20,000

4Land Composition and Cleaning area378,000

5Land Lease 90,000 Total5,000,000

26
4.2.2.Material and Inputs

A. Raw and Auxiliary MaterialsThe major raw materials and auxiliaries required for the

production of baker shown in Table 4.1below.

All the raw and auxiliary materials are to be imported.Promoter: Getachew Legesse Segni

Page25

Project Proposal For Baker Plant

Sr. No. Description Unit ofMeasureUnit Price (CIF)1 Different Bakery Raw materialsand other

relatedtone 23,128,000.00Total 23,128,000.00

4.2.3.Salary Expense

As indicated in part three of this study, the total cost of salary and wage is estimated to be

8,200,000 birr .

4.2.4.Other Operating Expenses

SNDescriptionAnnual Cost in Br.Assumption Used

1Property Insurance 10,091.95 10% of Fixed investment cost

2Audit and Legal Fee 10,000 10% of Salary

27
3Uniforms1,6001% of FC

4Telephone, Fax and Postal1,0001000per month

5Cleaning Gods Supplies2,000.0070*60br

6Repair and Maintenance5,229.88900 per month

7Advertisement2,000.001000 per month

9Stationery and other officesupplies1,000.00700 per month

10Electricity1,000.000.45*150,000W per year

11Water5,00.002*1000 m3 per year 12Fuel90,000.006500 lit*20 per year 13Oil and

lubricant1,000.0010% of fuel cost

14Miscellaneous Expense1,000.003,000 br month Total5,000,000.00Promoter: Getachew

Legesse Segni

Page26

Project Proposal For Baker Plant

4.3.Financial Analysis and Statements

4.3.1.Underlying Assumption

28
The financial analysis of the envisioned Baker plant is based on the data provided in the

preceding sections and the following assumptions.

A.Construction and Finance

Construction Period …….…18 Months

Source of finance……………..…30% equity and 70% loan

Bank interest rate …………..…………10 %

Tax holidays …………………………2 years

Operating costs increase by…………2%

Operating costs and raw material increased by……………………….………5%

Utilities and operation expense..…increase 3% per annum after 2ndyear

Wages and Salary increase………Increase 3% Per annum after 2nd year

Sales …………………………………..increase by 5 % per annum after 2nd year B.Depreciation

Building………………………………………….5%

Machinery and Equipment………..10%

Office Furniture…………………………10%

Vehicles……………………..…..20%

C.Working Capital

29
Accounts Receivable…………….30 days

Raw material Local ………….…..30 days

Work in progress…………………………………5 days

Finished Production …………..30 days

Cash in hand ……………………...5 days

Accounts payable…..30 days

4.3.2.Source of Fund

SNDescription% shareAmount(in birr)1Owners Share3030,000,0002Bank

Loan7070,000,000Total100100,000,000Promoter: Getachew Legesse Segni

Page27

Project Proposal For Baker Plant

4.3.3.Loan Repayment Schedule

YearPrincipalPaymentInterest(10%)Total Annual

PaymentRemainingBalance000070,000,00017,000,0007,000,0001,400,0006,300,00027,000,000

630,0001,330,0005,600,00037,000,000560,0001,260,0004,900,00047,000,000490,0001,190,00

04,200,00057,000,000420,0001,120,0003,5,000,00067,000,000350,0001,050,0002,800,00077,0

30
00,000280,000980,0002,100,00087,000,000210,000910,0001,400,00097,000,000140,000840,0

007,000,000107,000,00070,000770,0000

4.3.4.Annual depreciation schedule of the fixed Asset ( birr)

NoCapital Assetsvalues of Capitalassets (Br.)Rate of depreciation(%)Amount of

Depreciationestimated(Br.)

1Land, Building and Construction 3,805,2005 190,260

2Machines and Equipments4,200,00015 630,000

3Vehicles and Motors130,000,00015 195,000

4Office Equipment5,000,00020 100,000 Total9,805,2001,115,260

4.3.5. Balance Sheet (Beginning)

AssetCurrent AssetValue in BrCash30,000,000Inventory of raw material and

input70,000,000Total Current Asset100,000,000Promoter: Getachew Legesse Segni

Page28

Project Proposal For Baker Plant Fixed AssetLand, Building and

Construction18,052,000Machineries and Equipment22,000,000Office

Equipment130,000,000Vehicles5,000,000Total Fixed Asset5,805,000Total

31
Asset100,000,000LiabilityAccount Payable4,194,800Owner EquityCapital30,000,000Total

Liability and Owners Equity100,000,000

5. FINANCIAL EVALUATION

1. ProfitabilityAccording to the projected income statement, the project will start generating

profit in the firstyear of operation. Important ratios such as profit to total sales, net profit to

equity (Return onPromoter: Getachew Legesse Segni

Page29

Project Proposal For Baker Plant equity) and net profit plus interest on total investment (return

on total investment) show anincreasing trend during the life-time of the project.The income

statement and the other indicators of profitability show that the project is viable.

2. Break-even Analysis

The break-even point of the project including cost of finance when it starts to operate at

fullcapacity ( year 3) is estimated by using income statement projection.BE = Fixed Cost =

30%Sales – Variable Cost 48-163. Pay Back PeriodThe investment cost and income statement

projection are used to project the pay-back period.The project’s initial investment will be fully

recovered within 2-4 years.4. Internal Rate of Return and Net Present ValueBased on the cash

32
flow statement, the calculated IRR of the project is 12 % and the net presentvalue at 8.5%

discount rate is Birr 20 million.

C. ECONOMIC BENEFITS

The project can create employment for 35 persons. In addition to supply of the domestic

needs,the project will generate Birr 18.38 million in terms of tax revenue. The establishment of

suchfactory will have a foreign exchange saving effect to the country by substituting the

currentimports.Promoter: Getachew Legesse Segni

Page30

33